Congress enacted new bankruptcy legislation in late 2005 which adopted new requirements for filing bankruptcy. However, most people filing bankruptcy will still qualify for relief. So if you have overwhelming debt or financial problems you just can't solve, if you need a fresh financial start, you should learn the facts about bankruptcy.
The goal of personal bankruptcy is to eliminate excessive debt. Filing bankruptcy offers immediate protection from debt collections. A bankruptcy can immediately stop foreclosure, repossession and garnishments.
There are several types of bankruptcy. The most common consumer bankruptcies are chapter 7 and chapter 13. Filing a chapter 7 bankruptcy allows a debtor to eliminate most unsecured debts. This includes debts such as credit cards and medical bills.
In a chapter 13 bankruptcy, a debtor submits a plan to pay back some portion of his or her debts over time, usually three to five years. During the period of the payment plan debtors receive bankruptcy protection against any other collection activity on the debts included in the payment plan. In a Chapter 13, the debtor is able to pay reasonable living expenses and limit the payments to creditors to any excess income remaining after necessary living expenses are paid. A chapter 13 bankruptcy can also be written to allow a debtor to make up back payments on mortgage loans and on car loans and avoid losing the collateral.
In either chapter 7 or chapter 13, debtors can often continue to pay off mortgage loans, car loans and other types of secured debt without affecting the terms of their original agreements.
In order to file bankruptcy, you must present evidence to the court that you qualify. This involves an analysis of your income, your expenses and the reasons for your excess debt load. An attorney can help you prepare the appropriate information for the court and determine how bankruptcy will affect your specific debts.
Bankruptcy exemption laws protect many assets such as your homestead, your car and many other types of personal property. An attorney can help you evaluate the types and values of your assets in the bankruptcy context.
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